Creating a global standard for mobile wallets: Interview with Josh Gosliner, Head of Marketing at Boku

By Gaia Lamperti

Payments FinTech Boku works on removing all the complexity that exists around what they believe is the next generation of payments, mobile bands. While some markets, such as the UK, are seeing cards and contactless payments as the major driver of usage, for many markets around the world mobile wallets are already the preferred mobile payment method.

According to the company’s research, between 2020 and 2025 the number of mobile wallets transacting over $1 billion per year will increase by 27% creating a growing acceptance challenge for merchants. To support merchants with that challenge, Boku recently launched its M1ST (Mobile first) network, the largest mobile payments network in the world, reaching 5.7 billion payment accounts in 90 countries through 330+ mobile payment methods.

IBS Intelligence met Josh Gosliner, Head of Marketing at Boku, to discuss their recently published study on mobile wallets in the world with data from Juniper Research, explore the challenges of creating a new global payments infrastructure, and imagine what the future of mobile transactions will be like.

Boku’s latest report on mobile wallets measured the growth of mobile transactions in Europe, what are some of the trends we are seeing in this landscape? 

The use of mobile wallets is widespread in developing markets, whereas the way payments are maturing in Western Europe and North America seems to be very different. That’s because the credit card infrastructure is so strong in these markets that the way payments have become digitised there is through credit card rails. The difference between Western Europe and North America versus the rest of the world is the sort of reliance on credit card infrastructure versus the move to Cloud-based payments.  In Asia, there are three markets that are very advanced and have started to adopt mobile wallets, even though they have a high credit card penetration rate, and they are Japan and South Korea and Taiwan. They all have much higher-than-average credit card penetration rates, but their mobile wallet adoption projected out to 2025 is in the 90% range. So, I think it’ll be interesting to see if this starts to happen in Europe as well, like we are seeing in Russia where digital wallets have become a little bit more prevalent.

What could accelerate mobile wallet adoption? 

The kind of precursor to mobile wallets is smartphone adoption, and that’s what has really driven the market in Asia and why the region is so much more advanced in terms of mobile payments, If we consider the adjacency to very inexpensive devices from China, that means that many more people have a smartphone. A very high smartphone penetration rate coupled with a very low credit card penetration creates a gap that mobile wallets fit very nicely into. Also, the e-commerce boom will play a role in this and, hopefully, it’s going to become the m-commerce boom because a lot of consumers are mobile-first, if not mobile-only, and if merchants will want to attract and monetise these customers, they’ll need to have a platform that allows mobile purchases.

Talking about mobile payments, particularly in emerging markets, how do they improve the customer experience?

The reason why I think it’s so important that consumers in emerging markets are able to transact online is that, before mobile wallets, these markets were very cash-centric and the way you would pay online was by going to a convenience store, putting in cash, and then digitising it. But that’s a very expensive way to pay because there are so many people along the way that have to get paid in order to collect money and digitise it, that consumers would actually pay that premium. Mobile payments are removing the friction. Not only it’s a much better experience, but it’s also more inexpensive. Even people who don’t have bank accounts are using mobile wallets by getting paid into their mobile wallets and making payments out.

Simplicity is definitely the main asset of mobile payments. What about the safety aspect? 

Mobile payments are actually very safe. There’s no 16-digit code that you can take off a piece of plastic, right? Credit cards weren’t designed for e-commerce in the first place, they were designed to make an imprint on a piece of paper and not for the Internet. So, mobile wallets are incredibly safe because they’re digitising the entire transaction, which means the card-not-present fraud is not possible, and you also have the technology of the phone that makes access to the apps more secure. One of the things that Boku also does is mobile identity, and a couple of our customers for mobile identity are the mobile wallets themselves, so some of our technology goes into the mobile wallets to make them even more secure.

As we head towards a cashless society, will we ever get to a cardless society? This is to say, does Boku see mobile wallets more as an alternative or a substitute? 

That’s a good question. It has to be coexistence because the infrastructure is so strong in the developed markets of Western Europe and North America that, even if cards are facing some challenges, they will not go away. But cards are moving much more towards acting like mobile wallets because, effectively, once you put a credit card into Apple Pay or Google Pay, you’re kind of using a mobile wallet. It may operate differently on the back end, but the technology interface is the same, and the user experience as well. It would be interesting to see what younger people will decide to do in a few years’ time as they clearly have an aversion to credit cards, and are backing the emergence of ‘Buy Now, Pay Later’ products and new payments instruments like Venmo and Square Cash which are seen as a faster and easier payment method for them.

Boku runs the largest network of mobile payments, M1ST, but with scale, it also comes more challenges. How are you tailoring your products and services to address different areas, customer habits, and regional regulations? 

We have a business because it is hard, if it was easy, the merchants would just do this themselves. If you look at what Visa and MasterCard have done is that they’ve taken this very complex global infrastructure of banks and they’ve connected all of them into one scheme, so that I can make a payment with my credit card in Amsterdam and it routes all the way back to banks in the US. It’s very seamless, the merchants don’t have to think about anything, they just plug in Visa and MasterCard and it works. We’re trying to bring that same level of interoperability to mobile payments, an area that is still very new and where interoperability and payment licensing don’t exist. So, there’s a lot of complexity that Boku is solving and, as I said, that’s why we have this business. We are trying to move the money as efficiently as possible because everything you do that introduces more cost means less margin for the merchants and merchants are used to the kind of flat structure of credit cards. So, any extra cost it’s like a difficult pill to swallow for them. The technical side of the wallets is also complex, there’s no standardisation, and I think that’s what Boku is actually trying to create, a global standard for how mobile wallets should work in digital commerce. And so, when pushing this standard onto the mobile wallets, we’re making it easier for the merchants to accept them because they know that tokenisation or a mobile payment on file will be standard with every payment method that they have. We ensure that the merchant does one integration into us and then they can accept all these mobile wallets and don’t have to connect to all of them separately.

We mentioned a few before, but what are some of the countries where we can see the most innovative approaches and the widest integration of mobile payments? 

The whole mobile wallet revolution started in China, but I think it has reached somewhat of a level of maturity there. I’m not saying that that’s going to slow the innovation, it’s just a market in which almost everyone has one of these wallets and they are almost taken for granted. Southeast Asia, I think, is where it gets really interesting because you have very rapid growth and there are more challenges there as there’s just less infrastructure that you can build around. The region is solving a lot of the problems that apply to the other emerging markets, like Sub-Saharan Africa and Latin America. The other interesting region is the Middle East because it’s already fairly technologically advanced and you have a lot of investment coming in from overseas, so there’s a lot of innovation going on.